Sri Lanka

Recent developments and outlook. After a series of weather calamities in 2017, the economy is stabilizing. Real GDP growth is projected to reach 4 percent in 2018, supported by a recovery in agriculture and industry as well as robust growth in services. Important progress has been made in fiscal consolidation and energy pricing reforms. The CBSL has effectively curbed credit growth and stabilized inflation despite recent pressures, while stepping up its pace of reserve accumulation. Focus of the Article IV Consultation. Building on the authorities’ ambitious Vision 2025 strategy, discussions focused on strengthening institutions to promote stability and inclusive growth. Key priorities include promoting fiscal consolidation through more robust fiscal rules and SOE reforms; modernizing monetary and exchange rate frameworks; and accelerating growth-enhancing reforms.